Obsession With Appreciation

But in fact you can't use this analogy at all because RE bubbles and car bubbles are completely different animals.

You may have a point but RE in Silicon Valley isn't a good one.

 

Since both Real Estate & Sports Cars are subject to supply & demand & price fluctuations & both are subject to speculation.

The term bubble could be rightfully applied to both.

 

Seems to me that the depreciation / appreciation dynamic can be represented by an upside down bell curve.

Once these cars reach the bottom of the curve value wise, most seem to start rising again.

 

Wishful thinking? Buyer's remorse?

Maybe some couldn't really afford the car but talked themselves into it with the whole "it's an investment" argument. Maybe they talked a spouse into it with that argument. Who knows? I have found that a good majority of people walk around trying to fool themselves most of the time over their sketchy to bad decisions. Why should buying a Ferrari be any different? Plenty of people with money have no common sense.

I was not so much interested in appreciation as I was a lessening of depreciation. My BMW depreciated 6k in six months. I don't drive my car a lot as we live half the year somewhere else and I won't take it out in bad weather. I have always wanted a Ferrari and always loved the 360. I think the pricing was right and they won't devalue a lot more, but if they do, I still don't care, but maybe that's because I paid cash. If people have car notes, they may look at it as something they can't get out of unless they get some appreciation. Who knows?

 

Sorry, you are wrong. Not every rise in price is the same.

There may not be a bubble in RE in Silicon Valley. It's not based on speculation. It's based on supply and demand.

You have a lot a lot of well paying jobs in a limited area for housing. People will pay anything to live near work if they can afford it.

In the case of cars, there's no shortage of cars aside form the very ultra rare varieties.

What's causing the current market trend is speculation or fear based on the belief that prices will rise forever.

I honestly don't believe there is a bubble in Silicon Valley RE. There's no speculation going on or at least not to a large degree. The prices will rise until the tech industry busts first. That's not true with collector cars.

Apples and Oranges.

 

Or in our case, Apples and Androids!

8^)

SV

 

I completely agree. However, things take time. And the problem is that people get excited and believe these shenanigans are part of that bell curve. Which in reality they aren't. Appreciation of these cars, especially the high production ones, takes time. A 90 degree spike can only happen when the perfect storm hits. Which would be going rate being low to begin with, due to the general market not being willing to pay up. An increased interest over time, and the enthusiasts finding that the cars have indeed become EXTREMELY short in supply and almost gone. Then you can justify a price increase like that. This is not the case today. You can argue a million points from here until tomorrow about why it's different, (there being more millionaires now) blah blah. The same could be said last time it happened.

A great way to explain it in the simplest of terms, which people have refused to acknowledge for obvious reasons is the following. Take the 80s cars. Yes I agree that there is a market/future market for them. However, in order for the prices to surge the way they did over an 18 month period, the following had to have happened. hundreds of thousands of individuals would have to have all at the same time decided that they want to go out and buy these cars. The odds of all of these people wanting to do this at the same time based solely on the fact that they want the car to hold and drive for themselves over such a short period of time is a stretch IMO

 

Sorry to spoil your wrong statements with facts.

As Silicone Valley real estate is not immune to depreciation.

Many contractors building speculation homes in Silicone Valley lost more than 25% during the down turn.



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